The Economic Crime Levy – which housing associations are affected?

Posted: 16/10/2024

The Economic Crime Levy (ECL) is an annual charge which was introduced by the previous UK government as part of the Finance Act 2022, and under the Economic Crime (Anti-Money Laundering) Levy Regulations 2022. It came into force on 1 April 2022 and its main aim is to fund efforts to combat economic crime, such as money laundering and fraud.

The ECL applies to all organisations that:

• are supervised under the money laundering regulations by either HMRC, the Financial Conduct Authority, or the Gambling Commission; and
• have a UK revenue which is more than £10.2 million.

This therefore captures financial institutions, cryptoasset exchanges, money service businesses, casinos, high-value dealers, letting and estate agents, lawyers, and accountants. 

However, it may also capture housing associations.

If a housing association carries out shared ownership resales, ie where it acts as a sole agent for the co-owner on a shared ownership re-sale, that will then fall within the definition of estate agency business, which is a regulated money laundering activity. 

They may also be captured if they offer debt advice or provide lending facilities to their tenants, or broker financial deals. 

The ECL is paid as a fixed fee, the amount of which is determined by the housing association’s UK revenue. It is important to note that this is based on the overall revenue of the housing association, and not just the revenue derived from the regulated activity.

The amounts payable are as set out in the table below:

The ECL can impact housing associations, especially those with limited revenue from re-sale activities. The fixed levy rate may exceed the revenue generated from these activities, making in-house resales financially unviable. To help mitigate the amount payable under this levy, some housing associations have considered outsourcing their re-sale functions, or operating them through separate subsidiaries within the group.

Please contact Caroline Leviss if you would like to discuss any of the issues highlighted in this alert.

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